Stimulus/Revival Package - Tranche 5 - May 17

[kxl]

@dhaniel While other answers here have been pondering on about how theoretically this might be a good move or not, the real reason is technical.

So, filing for bankruptcy is not done only by the promoters. It can be done by a consortium of the firm's creditors also whose loans have been defaulted on. This is an involuntary bankruptcy.

I believe the extension is to prevent impatient creditors from pushing for involuntary bankruptcy.

Expect banks and other debt market players to take a hit here.

 

[lullublue1]

@zashmaster Pardon me, does that mean India is doing nothing for its travel, Hotel and service industry ? How they are planning to save millions of jobs ? Curious.

 

[zashmaster]

@lullublue1 The measures for MSMEs (plus the uniform scale for product and service MSMEs) can cover all the industries.

 

[millonreasons]

@zashmaster What about online travel booking agencies such as MakeMyTrip?

 

[bronsontaur]

@lullublue1 No country can help the Hospitality Industry tbh until the Virus is there!

Putting money into Hotel/Airline Industry would be a sinkhole!

 

[resjudicata]

@bronsontaur They can keep them alive by providing money. They've all got rents to pay and stuff.

 

[kimterry12]

@zashmaster States get much needed space.

 

[zashmaster]

@kimterry12 The FM repeated that they have used only 14% of the available space so far... Don't know what they would do with more space.

 

[matrixofgod]

@zashmaster That's not wholly accurate. Because of risks of breaching their limit the bonds yields for the states were very high. Now it will settle hopefully.

 

[smartgirl2298]

@zashmaster They are not confident about their repayment abilities.

 

[bontogo]

@zashmaster How are banks benefitting from this package?

 

[resjudicata]

@bontogo Not at all. Already under pressure of NPAs.

 

[glory19]

@zashmaster This was good. Now if things go south in a few months again can they swoop in to save the day once more?

 

[montse811]

@zashmaster ET Now journalist has posted the fiscal impact of the stimulus/new budget (all 5 tranches of the budget) - 1.979 Lakh crore. 1/10 of 20 Lakh Crore

https://imgur.com/mk1Ej3m

Livemint also has similar figures

Barclays says it's 1.5 Lakh crore

 

[zashmaster]

@montse811 To put the GOI view - the 20 lac cr includes the initial measures announced, and the RBI measures, and the 5 tranches. They have consistently mentioned this.

Almost all of the initial package was fiscal. One would expect that analysts would include them.

BTW, here are some nice comparisons as % of GDP (since it has become popular to use that ratio)

Full budgetary spending is about 11% of GDP (in terms of numbers)

The revenues are about 7 to 8% of the GDP...

The deficit is 3.5% of the GDP

You can draw your conclusion on how much more the government can spend for the crisis response and stimulus....

 

[montse811]

@zashmaster There is no problem with spending less if it's beyond their means to spend more. The issue is in announcing 20 lakh crore stimulus with much fanfare at 20 minutes past 8pm in the year 2020.

Also one of the reasons for less money is also the fact our economy hasn't been doing well for a couple of years or more now and when that was happening, the Govt kept insisting that we are doing very well most of time.

 

[resjudicata]

@zashmaster Most of these will be going down in corruption.

 

[rosslufc]

@zashmaster Again, nothing on the climate and pollution problems. Sure you might kickstart the economy, but climate/pollution should've been number one priority. Really disappointed.

 

[nischansr]

@rosslufc Why is climate a priority for this? This is not a budget, this is relief in light of the pandemic.

 

[rosslufc]

@nischansr My take is that this is more than just 'relief'. The numbers behind that make it very clear - $266 bn. This is a stimulus that is probably more important than yearly budgets, because of the context of the situation. Budgets are presented in "normal" circumstances. We are way beyond normal here.

Environment/climate/pollution should've been the focus. Any development this $266bn leads to should be sustainable, or it'll only exacerbate existing issues and create further problems. For instance, instead of putting money in fossil fuels, put money in battery tech and renewables.